Out of Control Health Care Costs

September 4, 2013

Telling most working families that health care costs keep rising every year is like saying there are clouds in the sky. It's simply an accepted fact. Yet when we delve into the details of why and how health care costs are climbing -- often well beyond the ability of families to keep pace -- the picture becomes even more troubling. It provides yet another reason to pursue meaningful reforms, says the Fiscal Times.

The rate of increase is unsustainable.

A recent survey by the Kaiser Family Foundation and Health Research Educational Trust reported "modest" increases in insurance premiums -- 5 percent for individuals and 4 percent for families.

In the most recent year, that translates into an average $5,884 annual premium for singles and $16,351 for families.

While single-digit hikes rarely cause alarm, even at 5 percent premiums double over about 14 years.

The total cost is unprecedented relative to wage income.

Kaiser found that there has been a total premium increase of 80 percent from 2003 to 2013.

During that decade, average worker contributions to health premiums have nearly doubled -- from $2,412 in 2003 to $4,565 this year. Workers at smaller firms pay even more.

Out-of-pocket costs are soaring.

Remember the days when employers offered cradle-to-grave coverage well into retirement, with nearly everything covered? That's a rarity today.

Now 78 percent of workers surveyed have to pay a deductible -- more than $1,000 -- which is up from 72 percent last year.

Employers will be eyeing health exchanges carefully.

Nearly a third of large employers -- those with at least 5,000 workers -- said they are considering offering benefits through private exchanges.

Just 7 percent of employers with less than 1,000 workers said they would consider private exchanges.

Despite the myriad moves in employer health care systems to focus on wellness and long-term health, the larger trend is still a continuing run-up in out-of-pocket expenses. The employer-based system, requiring each employer to bargain for the best premiums and coverage, is still inefficient. As long as that model remains in place, employees can expect to see their health costs rise even more while their wages lag behind health care inflation.